By: Staff Writer
August 25, Colombo (LNW): Sri Lanka’s industrial sector has welcomed progress in tariff negotiations with the United States, though concerns are growing over hidden conditions and the possibility of tougher measures if Washington’s demands are not met.
Ceylon National Chamber of Industries (CNCI) Chairman Kevin Edwards said manufacturers were “broadly satisfied” with the Government’s efforts to cut reciprocal tariffs on US imports to 20 percent from the earlier 44 percent. However, he cautioned that the business community remained in the dark over the full scope of trade concessions and the impact of future US policy shifts.
“We are happy with the progress made by the Government to reduce US tariffs further, but we do understand there is some give-and-take. At the moment, we are in the dark about what is being negotiated and what the Government plans to offer the US,” Edwards added.
The uncertainty is heightened by speculation that former US President Donald Trump—who has already threatened higher tariffs on trading partners who fail to comply with undisclosed conditions—may push for tougher terms if Sri Lanka is perceived to be uncooperative.
Analysts warn that Sri Lanka, whose exports to the US account for nearly 27 percent of total merchandise earnings, could face severe shocks if tariff preferences are withdrawn or reversed.
Textiles and apparel, which represent over 40 percent of exports to the US, would be the most vulnerable sector. Even a modest 5–10 percent hike in tariffs could erode Sri Lanka’s competitiveness against Bangladesh, Vietnam, and Cambodia, all of which enjoy preferential access to US markets. According to industry estimates, a 10 percent increase in US duties could wipe out more than USD 600 million in apparel earnings annually.
Edwards further noted that Sri Lanka’s export-oriented manufacturers rely on cost-effective raw materials and energy inputs from Asian suppliers. Imports from the US, he warned, not only take longer to ship but also raise costs significantly. With global oil prices remaining volatile, distance-based freight charges from the US could place additional pressure on local industries already facing thin profit margins.
The CNCI, representing over 400 domestic manufacturers, has urged the Government to maintain transparency in its negotiations and safeguard energy affordability. “For the moment, we will be patient, knowing there is no choice in the matter, and drawing comfort that the bigger industries are also working closely with the Government,” Edwards said.
While tariff relief offers temporary breathing space, experts caution that Sri Lanka’s trade dependence on the US leaves the economy highly exposed to Washington’s shifting political winds. With Trump hinting at punitive tariff hikes for non-compliant countries, Colombo faces the delicate task of balancing industrial protection with the demands of its most important export market.
